Pitcher (Bankrupt), Re, 2015 MBQB 45

• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: March 18, 2015
• Jurisdiction: Manitoba
• Citations: 2015 MBQB 45;(2015), 316 Man.R.(2d) 155 (QB Reg.)

Pitcher (Bankrupt), Re (2015), 316 Man.R.(2d) 155 (QB Reg.)

MLB headnote and full text

Temp. Cite: [2015] Man.R.(2d) TBEd. AP.007

In The Matter Of The Bankruptcy Of Twila Joyce Pitcher

Teresa McCrae Investments Inc. and Dan McCrea (claimants) v. Leigh C. Taylor & Co. Ltd., as Trustee of the Estate in Bankruptcy of Twila Joyce Pitcher (respondent)

(BK 13-01-03101; 2015 MBQB 45)

Indexed As: Pitcher (Bankrupt), Re

Manitoba Court of Queen's Bench

Winnipeg Centre

Cooper, Registrar

March 18, 2015.

Summary:

The bankrupt, her husband and the husband's corporation were defendants in a civil suit filed by the claimants, who alleged that the husband and the corporation had defrauded them of almost $5 million. The bankrupt and her husband sold their home in April 2012 with a possession date in June 2012. The claimants filed a caveat against the property in May 2012. In order to permit the sale to proceed, the parties agreed to have the net proceeds held in trust, pending the litigation. The bankrupt and her husband separated. Under a separation agreement, the husband transferred all of his interest in the proceeds of the home's sale to the bankrupt. In March 2013, the bankrupt filed her assignment in bankruptcy. The trustee disallowed the claimants' claim to the funds held in trust, taking the position that they constituted assets of the bankruptcy. The claimants filed a motion before the Registrar, appealing the trustee's disallowance and for an order directing that the appeal be heard in the civil proceeding.

A Registrar of the Manitoba Court of Queen's Bench, having found "clear authority" that the funds held in trust were not the property of the bankrupt at the date of her bankruptcy and had not vested in the trustee, agreed with the claimants that this was not an issue to be determined by the Registrar on an appeal from a trustee's disallowance. A judge had to determine whether or not the funds were trust property belonging beneficially to the claimants.

Bankruptcy - Topic 488

Property of bankrupt - Exemptions or exclusions - Trust property - The bankrupt, her husband and the husband's corporation were defendants in a civil suit filed by the claimants, who alleged that the husband and the corporation had defrauded them of almost $5 million - The bankrupt and her husband sold their home in April 2012 with a possession date in June 2012 - The claimants filed a caveat against the property in May 2012 - In order to permit the sale to proceed, the parties agreed to have the net proceeds held in trust, pending the litigation - The bankrupt and her husband separated - Under a separation agreement, the husband transferred all of his interest in the proceeds of the home's sale to the bankrupt - In March 2013, the bankrupt filed her assignment in bankruptcy - The trustee disallowed the claimants' claim to the funds held in trust, taking the position that they constituted assets of the bankruptcy - The claimants filed a motion before the Registrar, appealing the trustee's disallowance and for an order directing that the appeal be heard in the civil proceeding - A Registrar of the Manitoba Court of Queen's Bench, having found "clear authority" that the funds held in trust were not the property of the bankrupt at the date of her bankruptcy and had not vested in the trustee, agreed with the claimants that this was not an issue to be determined by the Registrar on an appeal from a trustee's disallowance - A judge had to determine whether or not the funds were trust property belonging beneficially to the claimants - See paragraphs 57 to 72.

Bankruptcy - Topic 3639

Creditors - Claims - General - Disallowance of (incl. notice of) - [See Bankruptcy - Topic 488 ].

Bankruptcy - Topic 3721

Creditors - General - Claim to fund held in trust - General - [See Bankruptcy - Topic 488 ].

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - [See Bankruptcy - Topic 488 ].

Cases Noticed:

Acepharm Inc. (Bankrupt), Re (1999), 122 O.A.C. 63 (C.A.), refd to. [para. 31].

Greenstreet Management Inc. (Bankrupt), Re, [2007] O.T.C. Uned. O17 (Sup. Ct.), refd to. [para. 34].

Puratone Corp. et al., Re (2013), 295 Man.R.(2d) 55; 2013 MBQB 171, leave to appeal granted (2014), 303 Man.R.(2d) 15; 600 W.A.C. 15; 2014 MBCA 13, refd to. [para. 35].

Holmes v. Amlez International Inc. et al., [2009] O.T.C. Uned. P81 (Sup. Ct.), refd to. [para. 39].

DSLC Capital Corp. v. Credifinance Securities Ltd. et al. (2011), 277 O.A.C. 377; 2011 ONCA 160, affing. [2010] O.T.C. Uned. 984; 2010 ONSC 984, dist. [para. 40].

Credifinance Securities Ltd. Re - see DSLC Capital Corp. v. Credifinance Securities Ltd. et al.

Ascent Ltd. (Bankrupt), Re, [2006] O.T.C. 17 (Sup. Ct. Reg.), refd to. [para. 45].

Bland, Re, [1977] B.C.J. No. 1284 (S.C.), refd to. [para. 49].

Tradmor Investments Ltd. v. Valdi Foods (1997), 43 C.B.R.(3d) 135 (Ont. C.A.), refd to. [para. 52].

Bothwell (Bankrupt), Re, [2000] O.T.C. Uned. C25 (Sup. Ct. Reg.), dist. [para. 53].

Royal Bank of Canada v. TWY Enterprises Inc. et al. (2003), 174 Man.R.(2d) 85; 2003 MBQB 66, refd to. [para. 70].

Authors and Works Noticed:

Houlden, Morawetz and Sarra, 2014-2015 Annotated Bankruptcy and Insolvency Act, pp. 3-441 [para. 69]; 324 [para. 64].

Counsel:

Harvey J. Slobodzian and C. Morgado (articling student), for the claimants;

Leigh C. Taylor and Jillian Taylor-Mancusi, Trustees in bankruptcy.

This motion was heard by Cooper, Registrar, of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on March 18, 2015.